Kim Hyun-bin began his journalism career at Arirang TV from 2012 to 2017, specializing in defense, foreign affairs and the economy. In 2018, he joined The Korea Times, covering society and business, and is currently responsible for embassy affairs.
Mobile carriers, gov't in feud over frequency contract cost
SK Telecom Logo. Courtesy of SKT
By Kim Hyun-bin
By Kim Hyun-bin
SK Telecom, KT and LG Uplus are in a conflict with the government over the frequencies band extension costs for 2G, 3G and 4G networks as the term is set to expire in June 2021.
The three networks take up 78 percent of the total frequency bandwidth in the country, excluding the fifth-generation (5G) frequency band that was auctioned in 2018.
The three telecom companies will need to renegotiate the extension of their current frequency usage contracts next month, but a conflict has risen over the government's price assessment procedures.
According to the country's Wireless Telegraphy Act, when there is high demand for selective frequencies it holds an auction, while others network contracts are extended where the price is set in consideration of the telecom companies' expected total sales.
The telecom companies are urging the government to provide a more concrete and rational calculation standard as it is difficult to estimate the company's total sales figure as the contract is normally made for a five-to 10-year term.
In 2016, extension costs are estimated to have cost the three telecom companies 3 trillion won.
At the time, the government had slapped a levy of 7.9 percent of the telecom companies' total sales for extension costs, which telecom companies argue is much higher than other developed nations.
According to communication businesses, in France 2.65 percent of the telecom companies' total sales were put in for extension costs, U.S. 2.26 percent, England 1.68 percent and Japan 0.73 percent.
“We are investing heavily in the 5G network to revitalize the economy from COVID-19, but if the frequency band reassignment cost is excessive it would become a heavier burden,” KT CEO Ku Hyeon-mo told ICT Minister Choi Ki-young in a meeting last month. “Please revise price-setting procedures so it would become more reasonable.”
However, the government says its frequency band extension costs are needed to efficiently provide the services to the whole nation and that the telecom companies need to pay their fair share to utilize the government-owned services.